Thursday, May 20, 2010

Correction Territory

Stocks are likely to continue their aggressive decline and shed another 20 percent in value as the world economy weakens, economist Nouriel Roubini told CNBC.

I think this guy is an optimist. I think the stock market has been floating on laughing gas, because I don't see anything else holding it up.

From the article:

As the market slides into correction territory, Roubini said weakness in euro zone countries and a slowdown in the US and other developed countries will make things even more difficult for investors in the months ahead.

"There are some parts of the global economy that are now at the risk of a double-dip recession," said Roubini, head of Roubini Global Economics. "From here on I see things getting worse."

I think "Correction Territory" would be a good name for a rock band, or maybe a sci-fi book. Also, there is that ugly term "double-dip recession" again.

One last bit from Mr. Roubini:

"What needs to be done is clear. We need to raise taxes and cut spending. Otherwise we're going to get a fiscal train wreck," he said. "It's going to take years of sacrifices."

He is half right. Our government must cut spending, but raising taxes is kind of like putting a tourniquet around your neck to stop the bleeding from a scalp wound.